Archive December 6, 2018

National Living Wage – increase next year

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You’ll know by now that each year the government announce increases to the National Minimum Wage and the National Living Wage. Predictions are in for what the new National Living Wage rate will be in 2019 and it’s a significant increase so worth planning for…..

What is the National Living Wage?

This is the rate that employers legally have to pay to their employees over the age of 25. It was first introduced in 2016 at £7.20 and resulted in significant costs to many employers.

Many people are still confused by the other term ‘Real Living Wage’. Just to clarify, this is the figure calculated by the Living Wage Foundation based on the real cost of living in the UK. It causes confusion but the main difference is that there is no legal requirement to pay the ‘Real Living Wage’.

What will the National Living Rate be next year?

The rate is currently £7.83. Phillip Hammond announced in the recent budget that the National Living Rate would be rising to £8.21 next year. This represents a 4.9% rise to the current rate and therefore one that employers need to start planning for.

(For information the real living wage has been announced as a 2.9% increase to £9.00 per hour except for London where it increases by 3.4% to £10.55).

Don’t get caught out

The next rise will take effect in April next year. Remember, employers who are incorrectly paying their staff below the minimum rates can be named and shamed and also fined up to 200% of the underpayment. Most employers caught by this in the past were as a result of simple errors and not deliberate attempts to underpay their staff.

Start planning

You know it’s coming and we recommend that you analyse your workforce now to assess the cost and plan for the increases.

Employment Tribunal Statistics

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As people managers, it’s worth a look at these numbers to see what impact the abolishment of Tribunal Fees has had.

Tribunal Statistics April to June 2018

The Ministry of Justice has published statistics and here are the key figures:

  • the number of single claims lodged increased by 165% compared with the same quarter last year;
  • the number of single claims outstanding rose by 130% compared with the same quarter last year. HM Courts & Tribunal Service is in the process of recruiting more employment judges, which will help reduce the backlog in the medium to longer term;
  • disability discrimination cases had the largest average award (£30,700). Religious discrimination claims had the lowest average award (£5,100). The average award for unfair dismissal awards was £15,007.

Tribunal fees were abolished in July 2017 which means that there is no longer a fee to be paid for an individual to bring any type of claim to an Employment Tribunal and this is likely to be a major factor is the sharp increase in claims.

What does this mean for employers?

With the removal of tribunal fees, it is likely as a Company that you may receive more claims from employees/ex-employees than in previous years, as individuals are no longer put off making a claim because they cannot afford the fee. In addition, it could result in an increase in the number of spurious claims made as people can lodge a claim without any evidence to support their case.

Employers need to ensure that they are taking steps to prevent them being taken to tribunal initially. Providing the right documentation, having policies in place and following these procedures correctly will reduce the likelihood of facing a claim.

The reputational damage of ending up in front of an employment tribunal has become greater due to the introduction of decisions being published online. This lets anyone view the decision and the scrutiny of business practices normally carried out by a tribunal. Taking steps to prevent unlawful treatment in the business will reduce the many risks of going before a tribunal.

Employment Tribunal Award Limits Increases

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From 6th April 2018, the limits applying to various tribunal awards and other amounts payable under employment legislation increase, including the maximum amount of a week’s pay for the purpose of calculating the basic award for unfair dismissal and a redundancy payment, increases to £508, and the maximum amount of the compensatory award for unfair dismissal, which increases to £83,682.

Family Friendly and SSP Pay Rates Increases

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Statutory maternity (SMP), paternity (SPP), adoption (SAP) and shared parental pay (ShPP) will rise from £140.98 to £145.18 a week from April.

Usually the rate increase would be from 1 April, but the statement to Parliament announcing the new figures suggests the date this year may be Monday 9 April 2018.

Statutory sick pay (SSP) is due to rise this month from £89.35 to £92.05.

The lower earnings limit will rise from £113 to £116.

National Minimum Wage / National Living Wage increases

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The following rates are effective 1st April 2018:
• The rate for workers aged over 25 years (NLW) will increase from £7.50 to £7.83 per hour
• The rate for workers aged 21 to 24 years will increase from £7.05 to £7.38 per hour
• The development rate for 18 to 20 years olds will increase from £5.60 to £5.90 per hour.
• The rate for 16 to 17 year olds will increase from £4.05 to £4.20 per hour.
• The apprentice rate will increase from £3.50 to £3.70 per hour